How Smart Contracts are Used for Gambling

Salomon Kisters

Salomon Kisters

Feb 17, 2023

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Multiple generations have embraced gambling as a part of society, with its roots tracing back to ancient civilizations like Ancient Egypt where dice were first introduced.

Throughout history, people across social constructs have engaged in betting, and with the advent of the internet, it has now shifted online.

The birth of online casinos in 1994 marked the beginning of a rapid expansion in the gambling industry.

In recent years, the rise of blockchain technology has led to the introduction of decentralized betting platforms and applications, enabled by widespread internet access and improved mobile phone availability.

What are Smart Contracts?

Smart contracts are software uploaded on a blockchain network. These contracts self-execute once a pre-defined set of conditions are met. Most commonly, these contracts can be utilized to carry out agreements among the members without the presence of a third party. Smart contracts are self-sufficient programs that keep working as conditions are met, making the task more efficient.

The jobs that can be completed through smart contracts include monetary transactions between individuals, registration of vehicles, or ticket issuance. After completing the process, a new block is instantly added to the previous block. Once a part of the chain, no changes can be made to the new block. The members only have access to view the outcome, not change the content of the contract.

Decentralized Applications vs. Smart Contracts

Decentralized applications originate from the software the blockchain interacts with, which manages all the member networks. The application layout is very similar to those of standard websites and mobile apps. DApps have the front end built for the eyes of the user, while the back end is focused on business logic. Smart contracts are the foundation of the decentralized application.

DApps are websites or apps powered by blockchain, whereas smart contracts establish a connection between the decentralized apps and blockchain through API connectors. Decentralized programs are used to operate the back-end code of the applications.

A smart contract is a part of the main DApp operating in the form of a small code. Decentralized applications work through a combination of the front-end code and smart contract. Both work harmoniously as a single program.

Cryptocurrency Gambling

Crypto gambling is a type of digital gambling where cryptocurrency is used as a wagering unit. Cryptography is a technique used to make information and communications more secure with the help of mathematical concepts and algorithms.

It is utilized by cryptocurrency online assets to provide safe transactions and controls over the formation of new units. While Bitcoin is the most established form of cryptocurrency, we have seen the emergence of many other cryptocurrencies lately, each with its own advantages and disadvantages.

The very first version of online gambling launched in 2012 was the decentralized platform of Satoshi Dice. It was designed as a simple dice game allowing players to place bets through Bitcoin. It quickly progressed to one of the most popular gambling DApps on the blockchain. However, despite its unwavering success, the platform was eventually shut down due to concerns over its regulation.

With time, more decentralized gambling platforms emerged, incorporating even more innovative and better features as time passed. Fomo3D and PoW3D are Ethereum-based platforms that developed new games which brought together the aspects of social interaction, gambling, and investment.

Other notable platforms for crypto gambling include:

  • BitStarz: A popular online casino dealing in many cryptocurrencies, such as Bitcoin, Litecoin, and Ethereum. Users can choose from various gaming options, including live dealer games, slots, and table games.
  • A well-known sports betting website that allows players to use cryptocurrency to place bets on various sporting events. It encompasses live betting as well as the opportunity for placing bets before the match.
  • FortuneJack is a platform that provides an extensive catalog of games such as slots, table games, dice games, live table games, and a sports book.
  • lets players battle against each other with digital currency through its poker room. The options include sit-and-go games, tournaments, and cash games.
  • Bovada is a sports betting site that accepts cryptocurrencies such as Bitcoin, Litecoin, and Ethereum. There are also casino and poker games.
  • Nitrogen Sports is a Bitcoin-only sports betting platform where players can bet on various sports. A casino and a poker room are also available.

The Use of Smart Contracts in Gambling and its Benefits

Smart contracts can be adjusted and fashioned to match the services required in gambling, including sporting event bets and lotteries. Players can deposit their currency into the smart contracts and collect their payouts at the end of the event.

The smart contacts can be calibrated for verification of the result through multiple channels even before the payouts are delivered. This is done to ensure that the correct outcomes are achieved. Since each block in the smart contract is permanently stored, making it immutable, players are provided greater transparency for their transactions.

Digital tokens, on the other hand, can facilitate rapid transactions with short settlement periods. The use of digital currencies provides access to the worldwide crypto market and goes beyond national and international boundaries.

Gambling is subject to and must counteract many regulatory obstacles all across the world. It remains inaccessible in many nations and their regions, even in this day and age.

Gambling apps are supported by decentralized platforms awarding them protection from any form of censorship as they are not liable to forceful shutdowns or a single point of failure. Due to this reason, it becomes imperative to be aware of the rules and regulations of any jurisdiction regarding gambling DApps before setting up operations.

The provision of personal information for the setup of an account and or cashing out of winnings is an essential aspect of traditional casinos.

This is in direct opposition to online gambling, where the player’s anonymity is maintained by linking their activity inside the network to a randomized set of alphanumeric characters. This greater level of privacy allows the players to carry out gambling transfers and withdrawals without revealing their identities.


The cost of online gambling is a significant concern, especially with the involvement of smart contracts. With every addition of data to a block, a series of steps are set into motion with a price associated with each step. This cost is borne by the individual who initiates the process.

For a platform such as Ethereum, the charges are calculated in “Gas," which is a significant expense for the players. This becomes even more apparent when players carry out multiple small transactions simultaneously. In such a situation, the transaction cost could be higher than any collection from wins, leading to a loss for the players. This can cause them to lose interest due to a lack of incentives.

The speed at which results are obtained has also been identified as a concern. Using a smart contract, the period from the placement of the bet to producing an outcome and then routing the points earned to the player can take over two minutes. This is damaging to the efficacy of the game and may alienate the players involved. A gambling enterprise should take steps to provide better and faster services to guarantee continuous traffic and substantial revenue.

At the same time, a lack of regulations governing cryptocurrencies opens the door to a greater likelihood of fraud and illegal activities, which can also encourage negative influences in the market. Even with the increasing popularity and use of cryptocurrency, most people are still not quite familiar with online gambling. It is also worth noting here that gambling may be addictive, and the secrecy and convenience offered by online gambling platforms may exacerbate this issue.

There are even more challenges that come with the use of cryptocurrency for gambling. It may be difficult for players, for instance, to grasp the technology underlying smart contracts.

In addition, the value of cryptocurrencies can fluctuate quickly and unexpectedly, making proper financial management, therefore, quite challenging. The quantitative predictive modeling methods used in forecasting the direction of traditional currencies may only be appropriate in some cases with blockchain and smart contracts.


Smart contracts are revolutionizing the world of online gambling and changing the way that players can interact with casinos and gaming sites.

There is a bright future for smart contracts ahead as they possess the ability to get rid of chargebacks, cultivate the trust of the players, and lead to a decrease in the cost of administration.

They can give way to the development of far more groundbreaking and exciting games and continuous innovation in the gambling industry.

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Please note that the Content may have been generated with the Help of AI. The editorial content of OriginStamp AG does not constitute a recommendation for investment or purchase advice. In principle, an investment can also lead to a total loss. Therefore, please seek advice before making an investment decision.

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